Fiala will not include potential gas revenue in Broome County budget

Aug. 17, 2010

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They tried it once. They tried it twice. They won't try it a third time.

Broome County Executive Barbara J. Fiala said Tuesday she will not include revenue from a potential natural gas lease of county lands in her 2011 budget proposal unless a deal with a company is imminent.

Revenue projections of $5 million from anticipated deals, which were approved by the county Legislature, went unfulfilled in 2009 and likely will in 2010, as well.

"Certainly, we will not shut out communications with interested parties, but I will not put the revenue into the 2011 budget," Fiala said. "If we have a deal in 2010, certainly we will present it to them, and if the legislators feel they can support that, then it will go in. But I will not do it without a vote and a commitment to accept the offer that is made to us."

Last month, Fiala pulled a lease offer from Denver-based Inflection Energy after it became clear it did not have the necessary support from the Legislature. The deal would have provided the county about $16 million in bonus money up front plus royalties, and had Fiala's support.

Now, the county will be forced to dip into its "rainy-day account" to help cover the budget gap. Fiala said the county will use about two-thirds of its fund balance -- or $2 million -- to cover the shortfall.

"We should be accumulating a larger fund balance but because of these circumstances, we had to dip in," Fiala said. "It's not an ideal situation. Every county should have so many dollars set aside for a rainy-day account."

Broome also saved about $2.1 million on a retirement incentive plan and freezes on hiring, travel and equipment to help with the gap, Fiala said. The remaining $900,000 has been covered by the partial repayment of a loan by the Broome County Industrial Development Agency, a lower-than-expected retirement bill from the state, and state advances for highway expenses.

Legislator Gene LaBare, D-Endicott, said Fiala's decision not to include projected drilling revenue in next year's budget is the right move.

"Last year, we put $5 million in -- and the Legislature voted for that -- anticipating that we would get at least that much in the budget from a lease," LaBare said. "Now, we're going to have to make cuts, but I think it's the right move."

LaBare defended the previous years' projections, saying it wouldn't have been right to levy $5 million in additional taxes when it seemed apparent the county would have a lease deal.

Fiala said layoffs and other cost-cutting measures remain an option in 2010 if sales-tax projections and savings estimates fall short, and likely will be enacted in 2011.

"If our sales tax figures continue as they have been, we're looking at an additional $500,000 to $1 million that goes toward the shortfall in 2010," she said, adding that layoffs in the Mental Health Department are imminent because the agency is well over budget. The county has asked agencies to reduce spending by 10 percent in their budget requests.

Talks have continued between the county and natural gas companies, Fiala said, but no concrete offers have come in since the Inflection deal fell through. She said when the county receives an offer, it will be presented to the Legislature.

The Inflection deal was doomed by a public meeting that attracted a capacity crowd nearly united against it. Before the meeting, Fiala said she thought there were enough votes for the deal to pass. After the meeting, only four confirmed they would vote in favor.